Wal-Mart Sues Ex-Executive, Saying He Stole $500,000

By ROBEN FARZAD

Published: July 28, 2005

Wal-Mart Stores filed a suit yesterday against Thomas M. Coughlin, a former vice chairman, seeking to void his retirement package and to recover funds the company said he fraudulently siphoned from the company.

The lawsuit, filed in Benton County Circuit Court in Arkansas, came after Wal-Mart sent a letter last month to Mr. Coughlin's lawyers, accusing him of ''a scheme to misappropriate corporate funds and property for his own personal benefit.''

The suit said that as Mr. Coughlin gained more power and control he ''used Wal-Mart as a means to subsidize personal expenses -- small and large -- in almost every area of his personal life.''

Mr. Coughlin resigned from Wal-Mart's board in March after the company disclosed it was giving documents to the Justice Department claiming to show that he used bogus expense claims and company gift cards to misspend up to $500,000.

The 124-page suit documents Mr. Coughlin's alleged misuse of the gift cards on items such as watches, Bloody Mary mix, a karaoke machine and underwear, among other goods.

The complaint also detailed Mr. Coughlin's alleged filing of fake expense accounts to purchase boots, airplane tickets, an XM satellite radio and truck accessories and accused him of ''moving from one fraud scheme to another over a period of several years.''

Between 1986 and 1992, Mr. Coughlin was responsible for investigating employee theft and abuse at Wal-Mart's Sam's Club warehouse unit, the complaint said.

The suit cited a 2002 newspaper article quoting Mr. Coughlin as saying, ''Anyone who is taking money from associates and shareholders ought to be shot. That greed will catch up with you.''

Having already rescinded Mr. Coughlin's retirement package, which includes approximately $14 million in restricted stock and salary, the company is now seeking to recoup about $6.5 million in bonuses it said he had been paid over the seven years of the alleged fraud.

In a previous filing with the Securities and Exchange Commission, Wal-Mart said that pending further investigation into Mr. Coughlin's actions, it had suspended his vesting of 186,407 shares of restricted stock, worth $9.77 million at the end of the company's last fiscal year, as well as 302,503 stock options exercisable within 60 days.

The suit filed by Wal-Mart yesterday was seen as legally necessary for the revocation of Mr. Coughlin's retirement package.

William W. Taylor III and Blair G. Brown, Mr. Coughlin's lawyers, issued a statement yesterday that called Wal-Mart's suit ''another step in its relentless campaign to discredit a man who dedicated his life to the company and its employees for 27 years.''

''Notwithstanding Wal-Mart's unfair tactics and public relations campaign, Mr. Coughlin remains confident that he will be vindicated.''

Mr. Coughlin is also the subject of a federal grand jury investigation.

Wal-Mart declined to comment.

Photo: Thomas Coughlin once said thieving employees ''ought to be shot.'' (Photo by Neemah Aaron/Associated Press)